The U.S. Department of Agriculture (USDA) Mutual Self-Help Housing program creates opportunities for low-income families in rural areas to become homeowners. The program groups together 4-6 or more families to contribute 65% of the labor building each other's homes. The contributed labor, called "sweat equity", provides the down payment on the mortgage. The mortgage is a USDA Section 502 Direct loan, the only federal funding to combine sweat equity homeownership, technical assistance, and affordable home loans for rural Americans. Interest rates are as low as 1% to make homeownership affordable for low and very low incomes.
There are approximately 100 nonprofit Self-Help Housing providers throughout the country administering the program. These organizations provide technical assistance and construction supervision to the families, so no prior construction experience is necessary. Self-Help Housing is an equal opportunity program, and many families are minority and/or single family head of household.
The Mutual Self-Help Housing Program has seven key features:
- It encourages self-reliance and hard work for participating families who help build the homes;
- It facilitates affordable homeownership by combining affordable mortgages with savings from sweat equity to avoid high down payments;
- The program is designed to serve members of rural communities with the greatest need by exclusively targeting low to very low income families;
- The Mutual Self-Help program creates wealth by serving as a tool for families to build equity through homeownership;
- It strengthens rural communities because self-help families must work together to help each other build their homes. Lifelong relationships are forged among new neighbors, giving each member of the family a vested interest in their community;
- The program stimulates local economies through job creation, local income and taxpayer revenue; and
- There is a high demand for the continuation of the program.